Reserve Bank keeps rates at three per cent

[triton07]

Reserve Bank keeps rates at three per cent.

http://www.theaustralian.news.com.au/story/0,25197,25575145-12377,00.html

 

[MichaelW]

Here's the Media Release with some interesting insight into the RBA's thinking:

RBA Media Release

A pick-up in housing credit demand suggests stronger dwelling activity is likely later in the year. Business borrowing, on the other hand, is declining, as companies postpone investment plans and seek to reduce leverage, in an environment of tighter lending standards.

Monetary policy has been eased significantly. Market and mortgage rates are at very low levels by historical standards. Business loan rates are below average. Much of the effect of this is yet to be observed. Fiscal measures are also providing considerable support for demand.

Nonetheless, the prospect of inflation declining over the medium term suggests that scope remains for some further easing of monetary policy, if needed. In assessing how it might use that scope, the Board will continue to monitor how economic and financial conditions unfold, and how they impinge on prospects for a sustainable recovery in economic activity.

Emphasis on "if needed". At present its not needed and may yet not be if the economy continues to recover. But they've now got scope to move if they need to and rising unemployment might be the catalyst to get them to move lower.

Cheers,
Michael